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WASHINGTON -- The Concord Coalition today welcomed President Clinton's
Medicare reform proposal but questioned the lack of means testing and the use of projected
budget surpluses as a way to finance future obligations. Concord Coalition Co-Chairs
and formerU.S. Senators Warren Rudman (R-N.H.) and Sam Nunn (D-Ga.) pointed
out that means testing was approved by the Senate two years ago, as a fair method of
reforming the Medicare program.

"Adding a prescription drug benefit to Medicare will help modernize the program,
but it must be done in a fiscally responsible manner. Medicare prescription drug subsidies
should not be provided to every recipient regardless of income or need. Our changing
demographics and the growing cost of other programs for seniors will not allow taxpayers
to subsidize prescription drugs for higher income people without threatening programs for
other age groups. This is really a matter of arithmetic rather than philosophy," Nunn
said.

"We are very disappointed that President Clinton has backed away from means
testing. The Concord Coalition has always believed that means testing is one of the
fairest ways to reform Medicare. Under the current system, Medicare benefits for the
well-to-do are financed in part by the payroll and income taxes from people like single
mothers doing their best to raise children on barely more than minimum wage, students
working their way through college, and couples who are both working, paying child care and
double commuting costs, and still not earning enough to afford a home of their own. It is
both unjust and bad economic policy to require these individuals to turn over a large
portion of their wages to buy health insurance for retirees who live far more comfortably
and securely than they do," Rudman said.

"Declining birth rates and increasing life spans for today's elderly mean
that the population pyramid that existed just 30 years ago – when the young
significantly outnumbered the old – will metamorphose into a population column where
various age groups will be roughly equal in size. A sure recipe for generational war is to
ask struggling young workers and families to finance an increasing number of wealthy
retirees," said Concord Coalition Policy Director Robert Bixby.

"If we're going to add a new entitlement like a Medicare prescription drug
benefit, it should be done on an income-related basis. Given the looming age wave, we
simply can't afford to subsidize everyone regardless of need. The bottom line is
universal entitlements without regard to income are fiscally unsustainable given the
changing demographics.

"What's more, devoting projected budget surpluses to Medicare merely masks
the need for real reform. It's like telling folks to take two surpluses and call
me in the morning. This does not cure Medicare's fiscal and demographic problems. It
simply makes us feel better," Bixby said.